All HMDA Reporters Will Have To Report Reasons for Denial

While this is a familiar data point for OCC regulated banks – now all HMDA reporters will have to report the reason for denial. For current reporters, it has been slightly modified by the 2018 HMDA regulation. If the HMDA reportable loan was denied, an institution must report the principal reasons for denial. This reporting requirement not only applies to complete applications, an institution must also report the reasons for denial when an institution denies a request for a preapproval. The regulation allows up to four principal reasons to be reported on the HMDA LAR.   For loans that were not denied, this data point should be reported as being not applicable.

The possible reasons for denial are: Debt-to-income ratio; employment history; credit history; collateral; insufficient cash; unverifiable information; credit application incomplete; mortgage insurance denied; other; and not applicable. If a principal reason for denial falls under the “other” category, the institution must report the specific reason as part of their HMDA data. It is important to note that an institution cannot enter the same code twice as a reason for denial on the HMDA LAR, for instance if you deny a loan for delinquent credit obligations and bankruptcy you would only enter credit history one time.